Allegheny (ATI) Files Tariff Exclusion Request for New JV

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Allegheny Technologies Incorporated ATI has filed for an exclusion from the recently imposed Section 232 tariffs on behalf of its newly formed joint venture (JV), Allegheny & Tsingshan Stainless. The JV imports semi-finished stainless slab products from Indonesia, which are now subject to the 25% tariffs.

This JV leverages Allegheny’s world class Hot Rolling and Processing Facility (HRPF), Tsingshan’s extensive resources and capabilities in Indonesia and the JV’s Direct Roll Anneal and Pickle (DRAP) Facility. The DRAP facility, which is located in Midland, PA, utilizes a continuous and efficient automated process for production of stainless sheet products by using technology that is globally available and used in production outside the United States for years.

In February 2016, Allegheny idled the DRAP facility partly due to subsidized and dumped stainless imports from China. The company has been able to restart the DRAP facility by leveraging Tsingshan’s Indonesian production of semi-finished stainless slabs. The JV also ensures the cost effective and efficient operation of the HRPF facility. This also enables the company to create and support skilled manufacturing jobs in the United States.

Allegheny is confident that its tariff exclusion request satisfies the criteria stated by the U.S. Commerce Department. Notably, financial benefits from the JV directly support Allegheny’s vital role in providing innovative components and materials that are critical for the U.S. defense applications.

After the request is submitted, the review of tariff exclusion will take up to 90 days to complete on the basis of published guidelines from the Commerce Department. Meanwhile, the JV will continue its operations.

Shares of Allegheny have rallied 27% in a year, outperforming the industry’s gain of roughly 19.2%.

Zacks Rank & Other Stocks to Consider

Allegheny currently sports a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks worth considering in the basic materials space are LyondellBasell Industries N.V. LYB, CF Industries Holdings, Inc. CF and Daqo New Energy Corp. DQ, each flaunting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

LyondellBasell has an expected long-term earnings growth rate of 9%. Its shares have moved up 13.1% over a year.

CF Industries has an expected long-term earnings growth rate of 6%. Its shares have gained 23% over a year.

Daqo New Energy has an expected long-term earnings growth rate of 7%. Its shares have rallied 146.9% over a year.

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